Posted on: Jun 25, 2014
There are a variety of different types of employment agreements that can apply to employment relationships, including:
- Permanent full time
- Fixed term (temporary)
- Part time – permanent or variable hours
Contractor agreements (contract for services) are NOT employment agreements, and should be an entirely different document altogether.
Employment agreement create the foundation of the employment relationship, guiding the parties through the lifecycle of employment, establishing agreed terms and conditions of employment, processes to follow, and obligations that each party is bound by. It is therefore vital that the correct type of employment agreement is used. It is not a simple “one size fits all” sort of document!
Permanent Full Time Agreements
The status of an employee is often based on the intended length of employment, or hours of work. Under an employment agreement that has no expiry date, an employee is considered “permanent” in the sense that the employment is intended to continue until either the employee or the employer takes steps to end it — through resignation, dismissal, restructure, retirement or some other event. Permanent employees may be engaged on a “full-time” or “part-time” basis — with their hours of work set out in the employment agreement.
Fixed Term (Temporary) Agreements
Employers must have a genuine reason for employing on a fixed term basis, and provide details of when the employment is expected to start and end prior to the employment commencing. Examples of genuine reasons include seasonal work, project work, temping work, or where the fixed-term employee is filling in for a permanent employee on leave. Note that establishing the suitability of the employee for permanent employment is not a genuine reason and is unlawful.
Part Time Agreements
While there is no legal definition for part-time and casual employees, generally speaking, part-time workers are employed on a permanent basis for less than the ordinary number of hours per week. Part-timers may, for example, work for a few hours a day or for a few days a week on an ongoing basis. Part-time workers have all the rights and entitlements of full-time workers. The hours of work can be regular, or can be variable each week. Having variable hours does not necessarily mean an employee is a casual.
A casual employee is an employee who is hired for short periods of time usually to do specific work. Casual employees are those who work only on an intermittent, irregular basis. Such a worker has no regular work pattern or importantly, any expectation of ongoing employment. The employment of these workers terminates at the end of each engagement. At that point the employee should be paid wages as agreed and the additional 8% holiday pay. As with fixed term agreements, it is unlawful to use a casual employment agreement for the purpose of establishing the suitability of the employee for permanent employment.
It is possible for a worker who is initially casual to drift into the status of permanent employee. This can happen if the employment becomes regular and the employee has an expectation of ongoing employment and the employer expects the employee to be available on a regular basis. Once the employee has drifted into a permanent status, his or her employment can be terminated only for good substantive reason, and after following a fair and reasonable procedure. In these circumstances, the employee cannot simply be laid off.
CASE STUDY – the Harris v White Cliffs Forests Limited* case, where a casual employee became permanent
Mr Harris claimed he was owed wages for public holidays, sick days and annual leave from his on-going employment with White Cliffs Forests Limited (“White Cliffs”). White Cliffs claimed that Mr Harris was a casual employee and was paid for leave on a “pay as you go” basis. However, White Cliffs accepted that Mr Harris had become a permanent employee at some point in the relationship. The Authority had to determine when Mr Harris ceased to be casual and became permanent.
Mr Harris was initially employed as a casual labourer in November 2010. Mr Harris and his father were the only two “hands-on” employees of White Cliff. Mr Taylor, a manager, confirmed that the arrangement to start work had been made through Mr Harris’ father. Mr Harris’ father told Mr Harris that White Cliffs had two to three months’ of work available.
The work stretched over three years without any apparent diminution. Mr Harris worked every working day of the week since commencing employment, unless he was on leave.
White Cliffs never requested Mr Harris to attend work on particular days or to perform particular tasks. On the evidence, both parties accepted that Mr Harris turned up at work for whatever hours the employer had available and, unless he was on leave, he attended work daily.
The Authority found that the number of hours worked did not determine whether the employment was casual or not. However, the greater number of hours worked regularly in a week, the less likely an employee was casually engaged.
The Authority confirmed that the strongest indicator of on-going employment was that the employer had an obligation to offer the employee further work and the employee had an obligation to carry out that work. The Authority accepted that Mr Harris had a reasonable and legitimate expectation of continuing employment after the initial three month period and there was an obligation on White Cliffs to provide that work. The Authority found that after the initial three month period, the casual nature of Mr Harris’ employment had ceased.
The Authority found that Mr Harris was a permanent employee and ordered White Cliffs to pay the wage payments for leave from on or about 17 February 2011, when the Authority determined Mr Harris had become a permanent employee.
The above case highlights how common and easy it is for this sort of situation to arise. Employers need to take care that they issue the correct employment agreements for each role. Likewise, if an employee believes the nature of their employment is not correctly reflected by their employment agreement they should raise this with their employer, or seek independent advice. If in any doubt as to the correct nature of the employment, or which form of employment agreement to use, contact Paul Diver Associates for assistance. Our team can advise you appropriately, or can tailor an employment agreement to suit your needs.
* Harris v White Cliffs Forests Limited  NZERA Auckland 99
This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.